GST Input Tax Credit for Corporate Food Aggregators
Food aggregators providing logistics and quality management for corporate canteens are providing a composite service taxable at 18% and can claim input tax credit.
- Ruling
- Advance Ruling No. 60/ARA/2025, dated 16.12.2025
- Dated
- 16 Dec 2025
- Authority
- Authority for Advance Ruling
This page was written by Patron Accounting’s AI from the official release and reviewed before publishing. It explains the document in plain language. It is not the document itself. Where this page and the original differ, the original governs.
The short version
- The company acts as a food aggregator for corporate clients.
- The activity is classified as a composite supply of services.
- The company must charge 18% GST on its services.
- The company is eligible to claim input tax credit on inward supplies.
In short
The company asked the Authority for Advance Ruling (AAR) in Tamil Nadu whether it should be taxed as a trader of goods or a service provider. Because the company manages logistics and quality for corporate food supplies, the authority decided it is providing a service. This classification allows the company to claim input tax credit on the food and services it buys from third-party kitchens.
What has changed
How it worked before
Businesses in this sector were often unsure if they should be treated as traders of goods or service providers, which affected their ability to claim input tax credit.
What has changed
The authority ruled that these activities fall under 'Other contract food services' (SAC 996337). This means the company must charge 18% GST but can now legally claim input tax credit on the supplies it procures, as it falls under the exception in Section 17(5)(b)(i) of the CGST Act.
Who this affects
Food aggregators, logistics providers for corporate canteens, and companies managing food supply chains for offices.
An example
Imagine a company, 'QuickCanteen Solutions', that coordinates food delivery from local kitchens to a large IT park. They manage the delivery schedule and ensure the food meets quality standards. Under this ruling, QuickCanteen would classify their work as a service, charge 18% GST to the IT park, and claim input tax credit on the payments they make to the kitchens.
What you should do
This ruling only applies to the company that asked the question. If your business model is identical, you may use this as a reference for your tax position, but you should consult a tax professional to confirm it applies to your specific contract before changing your tax filings.
If you do nothing
If you assume this ruling applies to you and it does not, you risk underpaying your GST or claiming input tax credit you are not entitled to. A tax officer may later reject your claims, leading to interest charges and penalties for incorrect tax reporting.
The terms explained
- Composite supply
- A package of two or more goods or services that are naturally bundled together and provided as a single service.
- Input tax credit
- The tax a business pays on its own purchases, which it can use to reduce the tax it owes on its own sales.
- SAC
- Services Accounting Code, a system used to classify different types of services for GST purposes.
The ruling in detail
Authority for Advance Ruling
M/s. Frutta Services Private Limited
Advance Ruling No. 60/ARA/2025, dated 16.12.2025 · Tamil Nadu
Questions before the authority
- Whether the assessor can claim input tax credit (ITC) and charge the client according to the category of supply of goods?
Facts
The applicant acts as an aggregator or facilitator for the supply of food and beverages to corporate clients. They do not manufacture or prepare the food themselves but procure it from third-party kitchens and arrange for its delivery to the client's location. The applicant manages the logistics and ensures quality standards, while the actual serving of food in the canteen is managed by the client.
Ruling
| Question | What the authority ruled |
|---|---|
| Claiming ITC and charging client based on supply of goods | No, the applicant cannot charge GST according to the category of inward supply of goods; they must charge 18% GST on the supply of services. The applicant is eligible to avail ITC on the inward supply of goods and services. |
The Authority ruled that the applicant cannot charge GST based on the category of inward supply of goods, as their activity constitutes a composite supply of services. Consequently, the applicant is liable to pay GST at the rate of 18% on the supply of services. However, the applicant is eligible to avail Input Tax Credit on the inward supply of goods and services.
Reasoning
The Authority determined that the applicant's activities, which include logistics, quality assurance, and coordination, constitute a **composite supply of services** rather than a mere supply of goods. This classification falls under SAC 996337, specifically 'Other contract food services'. Because the applicant is providing an outward composite supply of food and service in the same line of business, they satisfy the conditions of the proviso to **Section 17(5)(b)(i)** of the CGST Act, 2017, making them eligible for ITC. The tax rate is determined by the residual entry at Sl. No. 7(vi) of Notification No. 11/2017-Central Tax (Rate) as amended.
Provisions relied on
- Section 97(2) of the CGST Act, 2017
- Section 16(1) to 16(4) of the CGST Act, 2017
- Section 17(5)(b) of the CGST Act, 2017
- Schedule II to the CGST Act, 2017
- Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017
- Notification No. 20/2019-Central Tax (Rate) dated 30.09.2019
For the practitioner
This ruling clarifies that food aggregators who manage logistics and quality for corporate clients are providing a **composite supply of services** taxable at 18%, rather than trading in goods. It provides a favorable precedent for such entities to claim ITC on their inward supplies by invoking the exception under Section 17(5)(b)(i). Practitioners should note that this applies specifically to entities operating under similar contractual arrangements for ongoing food supply services.
Source
This is a summary prepared from the published order, which is a scanned document. It is a reading aid and not the authority: where the two differ, the order governs. Verify every provision against the original before relying on it.
Original order: https://www.gstcouncil.gov.in/sites/default/files/AAR/2-frutta_services_limited_aar_order-1.pdf
Legibility of the scan, as read: high.
Prepared 13-10-2026.
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